ACE DESIGNERS – Competing through process improvement1

Introduction
Ace Designer is the largest manufacturer of Computer Numerical Control (CNC) lathes (turning
machines) in India. The company had also established a presence in the global markets for machine
tools including the United States, Europe, South America, Middle East, United Kingdom, Chine, Japan,
South Eastern Asia, and Australia.

Jobber LM Elite (Exhibit 1) was one of Ace Designers’ flagship CNC turning lathes. In the last five years,
competition in the industry had increased dramatically; many foreign as well as domestic players had
entered the Indian machine tool industry and a price war was on the horizon. The company had
decided to implement a radical change, internally referred to as Half-Day Indexing, in LM Elite’s
assembly line, which was aimed at doubling the productivity of the line, thereby reducing costs. After
almost a year of hard work and analysis, the company had successfully implemented the project.

The machine tool industry in India

According to the survey conducted by Gartner Business Media, India ranked 14th globally on the scale
of production of machine tools and 10th in the consumption of machine tools. With the focus of the
Indian government on indigenous and the launch of the “Make in India” initiative, India was poised to
become a major competitor in the global machine tools industry in 2016 (Exhibit 2). This positive
business sentiment was also attracting many foreign machine tools manufactures from countries such
as Taiwan to set up their shops in India. Some 64 small domestic players had also sprung up during
the previous couple of years, and they had been nibbling away at the market share of bigger players
by competing over cost, and their share constituted about 38% of the domestic production.

ACE Designers’ process improvement journey

In the early 1990s, the conseil administrations of the company decided that ACE Designers would
compete based on volume, that is, ACE Designers would manufacture standardized machines were
aggressively priced. This meant a conscious drop in profit margins and a fierce pursuit of cost
reduction. ACE therefore transformed the assembly of their machines from a job shop into flow-line
during 1998-2002, in an attempt to reduce costs and increase volumes to meet the demand for a
standard machine tool, called the Jobber. In the job shop environment, the Jobber machines would
sit on the floor and all assembly activities were carried out right there. The flow-line implementation
required the machine to move physically from one station to the next (on similar lines of Automotive
Lines). The activities performed in all stations were sequenced and the material flow was mapped out
accordingly. This improved the assembly line process efficiency immensely. ACE next went for 5S
implementation during 2004-2008 to achieve business excellence through adoption of international
standards. 5S permeated through all parts of the plant including the offices where the files were sorted
in terms of frequency of usage to reduce access time; 5S also featured in most parts of the shop floor.
A direct outcome of implementing 5S principles for ACE Designers was to save over $75000 and
received the “5S Excellence Award” in 2006, 2008 and 2011.

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This document is a short version of a case “ACE DESIGNERS- COMPETING THROUGH PROCESS
IMPROVEMENT” published by Harvard Business Publishing Education in 2016.

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Half-Day Indexing
By the end of 2005, flow-line had been implemented in almost all the product lines and the lines were
capable of producing one machine per day, that is, the cycle time had been reduced to 8 hours. ACE
Designers was able to manufacture and deliver products much faster with better quality than all of its
competition. After seeing the success of low-line implementation, the top-level manager of the
company was still not content. He knew that cost was the key lever determining the success of the
Jobber and hence wanted to capture this market by bien cost competitive. In 2005, the top manager
threw down a gauntlet to his employees once more and asked them to halve the cycle time. This was
the genesis of the idea of half-day indexing. From his view, “Indexing in assembly line language is the
act of moving the line forward by one position and half-day indexing means moving the line once every
4 hours”. This ambitious vision sought to double the productivity of the line, but it just remained a
dream until 2015.

In 2014, ACE Designers was still the market leader in the industry, but the industry was becoming
increasingly turbulent, and major competitors such as Lakshmi Machine Works, Lokesh Machines
Limited, and Jyothi CNC Automation were scaling up their production capacities. By 2015, the head of
the High Volumes Business unit at ACE Designers, decided to try out half-day indexing in the Jobber
LM Elite product line. The Jobber LM Elite was chosen because it was one of the models with the least
amount of customization per machine.

The ACE Designers, Plant-2, where the half-day indexing was going to be experimented, was the oldest
plant in the Ace Designers group; it housed three different assembly lines including the Jobber LM
Elite line. The space available in the floor barely left enough room for the assembly operators to move
around. The plant infrastructure at this point could not be expanded owing to lack of acreage and
government regulations. The shop floor operators were a mixture of permanent line operators and
students interning from the nearby Nettur Technical Training Foundation (NTTF). Each shop floor had
its own floor manager. The assembly process also required highly skilled operators. The assembly
process started with a carcass (Exhibit 3) of the machine, which is a cast iron chassis. As the carcass
progressed through the assembly line, the rest of the components were assembled onto it. The
assembly process was divided into three parts- guarding, electrical, and testing (Exhibit 4-5)

Carcass Assembly

The Jobber machine started in the line as a bare machine bed (Exhibit 3), which served as the chassis
for the machine assembly. In the carcass stations, the major moving parts of the machine were
assembled onto the bed. The carcass assembly was the most physically exhausting part of the process
owing to the heft of the components involved. Consequently, this station had the greatest number of
NTTF students who assisted the operators in moving the heavy components, Once the carcass
assembly was completed, it was moved onto the guarding assembly on the Flow Line.

Guarding Assembly

The guarding station was where the external covers of the machine were assembled. The guarding
station had the highest number of activities compared to all the other processes. Guarding started

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with assembling of all the brackets necessary for the components that had already been installed onto
the carcass, and then moved onto adding the sheet metal Covers for the machine. The door assembly
along with the top and side covers of the machine was installed next.

Electrical Assembly

In electrical assembly, the wiring and electronic assembly of the machine was carried out. All the
wiring activities required for connecting electronic parts such as the electric motors, automatic
lubrication unit, machine electric lamp, cooling unit, etc were performed in the electrical assembly.
The electrical assembly required high precision, as there were hundreds of tiny electric interconnects.
ACE designers used color coding and labelling to identify the right connections as per global standards.
The most important electronic component that was added in the machine was the CNC controller,
which was the unit that controlled the entire machine through digital programming.

Machine Testing

Once the assembly was done, the Jobber LM Elite machine was tested on the line itself. The CNC
turning machines were high precision lathes and required considerable amount of testing before
shipping. The testing was divided into three parts: geometric testing, laser testing, and cutting testing.
The geometric and kinematic accuracy of the machine along with the deviations in straightness,
flatness, parallelism, etc. were evaluated through rigorous testing as per globally stringent ISO
standards before the machines were finally shipped.

Half-Day Indexing: Design and Implementation

The team approached the process improvement from three angles: Product design, Floor and
Assembly Design, and Inventory Management. The focus of the exercise was to study each activity
carried out during the production of a Jobber LM Elite machine and there was an attempt to either
eliminate it or reduce the time and effort required to perform it. The half-day indexing task force went
about creating a list of all the activities that were performed on the floor, the guarding assembly alone
was broken into 93 separate activities. The task force then started figuring out ways to reduce the
effort required in each of them and eventually could halve the overall cycle time. Interested reader
referred to pages 6-8 of the case “ACE DESIGNERS- Competing through process improvement” for
more details.

Value Stream Mapping: A study in waste elimination

Before adopting the half-index strategy of the Jobber LM Elite line to other lines, the top manager
turned his focus to optimizing it further. To this end, he requested the engineering team composed of
some engineers and students to consider exercising Value Stream Mapping (VSM) to identify further
cost reduction opportunities in the Jobber LM Elite line.

The team started by categorizing each of the stations in the line, and then zoomed in at the
workstation level for their analysis. Each individual took charge of assessing a particular workstation.
One engineer was assigned the role of VSM manager to tie together the whole process. One student
using a stopwatch collected the data regarding the duration of activities for each of the workstations.
The team planned to use the collected data for calculating certain key metrics for each of the

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workstations and the assembly line as a whole. These includes number of operators, cycle time,
uptime, changeover time, lead time and takt time. They also tried to find out areas of waste (Muda,
Mura, and Muri), which could be eliminated. Lastly, they planned to generate the time graph of value-
adding time vis-à-vis the non-value-adding time.

Shop floor inferences and observations

Exhibit 7 describes the information gathered by the team. The observations on the shop floor revealed
that some of the stations required far lesser time to complete their respective activities and so their
proportion of value-added time to the total throughput time was low. Some stations had contract
operators working on the machine and some stations had trainees (NTTF students). Based on the
observations and interactions with the shop floor employees, the team members jotted down the
points listed in Exhibit 8. All the data collected was compared against the planned labor requirement
provided in Exhibit 9. The VSM team also studied the forecasted demand versus actual production
details of Jobber LM Elite (Exhibit 10). The team noted that ACE Designers was unable to fulfil all the
orders that they had planned for the Jobber LM Elite, which resulted in slot losses (Exhibit 11). The
reasons for this were inadequate availability of raw material, insufficient labor, and lack of pull from
marketing or low quality of output. These issues made the team mull over the persisting inefficiencies
in the half-day indexed production line.

Assignment Questions:

1. From the labour perspective, do an analysis of the saving realized on cost per machine while
comparing 8-hour indexing and 4-hour indexing.

2. Draw the value stream mapping of the Jobber LM Elite line. Identify the major issues still
presented in the line (Summarize your findings in between 200-500 words). Note that since
the assembly line works as one-piece flow line, the cycle time and process time are the same.

3. What would be your recommendations to adopt before implementing half-day indexing to

other product lines in the plant? If applicable, justify your recommendations using future VSM.
(Summarize your findings in between 200-500 words)

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Exhibit 3

5
Exhibit 4

Exhibit 5

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 Exhibit 6

Exhibit 7
Data collected by the team from the shop floor
Station Name Start Time End Time Number of Number of Changeover
Operators Trainees Time
Carcass 1 (C1) 8:45am 12:01pm 1 1 5 minutes
Carcass 2 (C2) 9:25am 12:22pm 0.2 1 2 minutes
Guarding 1 (G1) 8:45am 11:57am 1 0.33 1 minutes
Guarding (G2) 9:30am 12:17pm 1 0.33 1 minutes
Guarding (G3) 8:45am 11:57am 1 0.33 1 minutes
Electrical 1(E1) 8:45am 12:15pm 2.8 0 1 minutes
Electrical 2(E2) 9:37am 11:02am 0.2 1 1 minutes
Testing 1 (T1) 9:00am 10:27am 1 1 1 minutes
Testing 2 (T2) 9:00am 11:33am 1 0 1 minutes
Testing 3 (T3) 9:00am 11:46am 1 0 1 minutes
• The break time from 10:05 am to 10:20 am for all the ten workstations. (This time needs to be
subtracted from the total time obtained using the above stated time details)
• The batch size for the assembly line was one unit and the factory operated only one shift. Each
shift was of 8-hour duration and started at 8:45 am. The first indexing of the day started at 12:03
pm simultaneously for all the workstations. The indexing of the day ended at 12:35 pm and
subsequently the workers broke-out for lunch.
• Number of working days per month is 22.
• The monthly gross salary of an operator is 2200€ and that of a trainee is 600€.

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Exhibit 8

Shop floor observations of the team

• At one particular workstation, the operator was absent as he had to go to his village for some
work. He had put in his leave application the day before, but on the day of his absence, there
was no one to work at his particular station. His replacement came in after a time lag of about
1.5 hours.
• The drill gun in one of the stations malfunctioned and the operator spent a lot of time finding
a replacement gun. He was sharing it with other operators until then, which created elays.
The erroneous drill gun was detected at 9:20 am; the replacement drill came only at 10:53
am.
• Even though each operator had a personal toolkit, lot of the tools were shared, which created
some delay and wait times. Certain tools like micro size screwdriver were being shared,
because the operators could not locate where they were due to their small size.
• Operators spent around 2-3 minutes unpacking most components because they were shrink-
wrapped. In addition to that, a lot of waste was being generated by the wrapping, which
needed a sperate milk run to clean up.
• The factory overall had a great employee culture with less than 4% employee turnover.
However, the team noticed that during the tea breaks, lunch, etc., the operators and the
trainee NTTF sat and socialized separately with little interaction between the two groups.

Exhibit 9

4,99
4 68,1
109,1 400
800 909,1
468,1
= 441 = 9702

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Exhibit 10
Jobber LM Elite Planned Vs Actual Monthly Demand (22-day work month)
Month Monthly Forecast Actual orders Received Actual dispatches Made
Apr-2015 0 0 0
May-2015 0 0 0
Jun-2015 0 16 0
Jul-2015 10 10 6
Aug-2015 32 37 26
Sep-2015 42 27 31
Oct-2015 35 24 19
Nov-2015 35 25 14
Dec-2015 17 31 21
Jan-2016 22 19 24
Feb-2016 30 12 22
Mar-2016 35 31 25

Exhibit 11
Jobber LM Elite: Lost orders
Month Slot lost Worker Material Marketing Quality
Sep-2015 5 1 3 0 1
Oct-2015 9 2 3 0 4
Nov-2015 2 2 0 0 0
Dec-2015 5 1 1 3 0
Jan-2015 1 0 1 0 0